Central Power Plants: An Endangered Species?

August 27, 2014


Within a few decades, large-scale, centralized electricity generation from fossil fuels could be a thing of the past in Europe.

That’s the word from investment bank UBS, which just released a new report anticipating a three pronged assault from solar power, battery technology, and electric vehicles that will render obsolete traditional power generation by large utilities that rely on coal or natural gas. According to Renew Economy, which picked up the report, the tipping point will arrive around 2020. At that point, investing in a home solar system with a 20-year life span, plus some small-scale home battery technology and an electric car, will pay for itself in six to eight years for the average consumer in Germany, Italy, Spain, and much of the rest of Europe. Crucially, this math holds even without any government subsidies for solar power.

“In other words,” the report says, “a German buyer should receive 12 years of electricity for free” for a system purchased in 2020.

That would mean that after 2020, the economic incentives will align to encourage the average European household to stop relying on the traditional utility model for their electricity needs. “Not all [power plants] will have disappeared by 2025,” the report concedes, “but we would be bold enough to say that most of those plants retiring in the future will not be replaced.”

The analysis also suggests that for utilities to survive in this new world, they’ll need to focus on providing smart distribution networks to better manage demand on a much more decentralized grid, and providing small-scale local back-ups for storage and power generation to that same effect.

The way this would work on the household level is that the electric car could charge at night, solar would provide electricity during the day, and excess solar generation stored up in the battery could be discharged in the evenings to cover most of a household’s remaining power needs. Power supplied by the grid likely wouldn’t go away completely, but would be relegated to plugging some small remaining holes, primarily in the early morning. And smarter grid systems for homes will allow energy demand to be met with supply much more efficiently.


In a major report on the “revolution” that could hit energy markets any time soon, UBS says – as we report here – that the combination of EVs plus solar plus storage will deliver a payback time of 6-8 years by 2020 – effectively making centralised fossil fuel generation redundant.

It says this is not understood by the utility industry or the market, because they are “not yet looking at the topics of solar, EVs and stationary batteries with a holistic view.”

“Our proprietary model (above) shows it is the combination of the three that makes solar fully competitive and that has the potential to bring disruptive changes to the electricity sector.

“Here are the maths: One can leverage the EV purchase with an investment in a solar system and a stationary battery. By doing so, one can optimise the self-consumption of solar power and minimise the “excess waste” of solar electricity.

“And what also may matter to many EV buyers: The electricity used to drive the car is carbon-free. The combination of and EV + solar + battery should have a payback of 7-11 years, depending on the country-specific economics. In other words, based on a 20-year technical life of a solar system, a German buyer should receive 12 years of electricity for free (purchase in 2020).”

UBS says pure battery EVs will be competitive with cars with internal combustion engines, and in some instance may already be so.



17 Responses to “Central Power Plants: An Endangered Species?”

  1. Jim Housman Says:

    I didn’t understand how the EV would be charged at night. Did I miss something?

    • Because there are stationary batteries at home that may be used to charge the EV in their scenario. Those can also charge an EV at night. I think workplace charging will be more likely also, and may be more practical as solar lowers daytime wholesale rate to night time levels. This has already started to happen in Germany. The more important point is the reduction in baseload power plants. That is accelerating as renewables are icreasingly adopted. That is happening now in Germany and South Australia. Adelady has commented on this.

      • “The more important point is the reduction in baseload power plants. That is accelerating as renewables are icreasingly adopted. That is happening now in Germany and South Australia”

        I can’t say anything about South Australia, as I haven’t researched what they’re doing.

        The “reduction in baseload power plants in Germany” is a myth. As the old saying goes, figures never lie but liars can figure. The Fraunhofer Institute (www.fraunhofer.de/en.html) is Germany’s green propaganda department, and they are frequently cited as the source for how wonderful Germany’s green power industry is doing.

        As I recently discovered, they are pulling off a major lie by not reporting what private power generators are doing, only considering public utilities as “valid.” The thing is that due to the high cost of electric power in Germany (caused by the green alternatives that are no longer optional for the public), many private industries in Germany have started to produce their own power. It has no reached the level of 16% of all industrial power in Germany is produced privately, and that is a 60% increase in just the last year. Since Fraunhofer pretends that privately generated power doesn’t exist, it’s easy to produce figures showing a rapid decrease in public power generation and consumption. Since most of this private power is being produced by burning coal and natural gas, it’s easy for Fraunhofer to claim that fossil fuel consumption is falling and that green power is taking over. When it’s natural gas, the company can claim it’s “green” even though it’s anything but.

        It’s a lie, and a big one.

        • ppp251 Says:

          What is the source of your claim that 16% of all industrial power is not metered in Fraunhofer reports?

          The video you linked talks about combined heat and power and it does provide any numbers of how much is this really widespread.

        • greenman3610 Says:

          the video you reference is actually further evidence to back up the OP. Central Power plants are going away. The video documents quite nicely the rise of what Amory Lovins calls “micro power” – these are inevitable parts of the buildout of the distributed grid.
          As solar + battery becomes more economically attractive, there will be a switch from small gas generators to renewables. That’s exactly the kind of transition that is being predicted by UBS and others.

        • Ad hominem is logical fallacy.

          “The “reduction in baseload power plants in Germany” is a myth. As the old saying goes, figures never lie but liars can figure. The Fraunhofer Institute (www.fraunhofer.de/en.html) is Germany’s green propaganda department, and they are frequently cited as the source for how wonderful Germany’s green power industry is doing.”

          Those quoted statements are unsupported. Its disingenuous to claim a myth and then support it with not data.

          Perhaps “Arbeitsgemeinschaft Energiebilanzen (Working Group Energy Balances – AGEB)” cannot be ad hominemed in the same manner.


          Here is the raw data.
          Lie to your hearts content. There is no escaping the increase in Erneurbauer,
          new energy.
          Given the number of nuclear power plants taken off line, one would think there would be awareness that they are also base load. It has been well established that renewable additions have more than covered the reductions in nuclear elsewhere. What is more notable is the planned further shutdown of base load.


      • The supporting articles makes the stationary battery role clear here.
        “EV charging during the night smoothes the daily demand curve. The stationary battery stores excess solar electricity during the day and releases it in the evening hours.”

      • South Australia
        “Contrary to what had been expected back in 2003, coal has been the unambiguous loser out of the rise of wind and solar PV. It was thought that gas, with its higher operating costs, would be the first to be displaced by bottom of the merit-order renewables, but for some reason that hasn’t happened.”


    • Did I miss something?

      Nope, you didn’t miss that; nothing in the article covers that little glitch.

      Here are some other things the article authors missed while penning their breathless predictions of the demise of central power plants:

      1.  The “EV charges at night” notion requires that the energy make TWO trips into battery storage, and that the home storage has to be big enough to serve both the household loads and the EV.  Much extra cost and losses, no benefit; the power could be shipped directly to the EV over the grid.

      2.  The graph showing that the battery will be tapped out in the early morning means you still need the grid there, not just some days but EVERY day.

      3.  What happens on a cloudy day?  Unless the European Commission is going to outlaw those, or something.

      4.  Since you’re still going to need all the generators and wires for the early AM and cloudy days, who is going to pay for it?  That’s something like 2/3 of the delivered cost of power, not the fuel.  You are going to have some MAJOR per-kW connection fees that are currently rolled into per-kWh residential rates.  So instead of paying per-kWh for grid power, the customer will be paying for their own generation, their own batteries, plus a per-kW fee every month to keep the grid there for when their own generation falls short.

      TL;DR they’re going to find out they were sold a sack of #&^!.

  2. kap55 Says:

    As long as it never gets cloudy in Germany, UBS’s analysis looks flawless.

  3. ppp251 Says:

    Thermal energy storage+PV is better suited for increasing self-consumption. EVs are going to be charged when prices will be lowest and that will probably during the day because of PV. You can charge EV at parking lot and use some of stored energy in the evening and morning.

  4. Coal plants endangered in Germany?
    “Utilities in Germany need to shut 7 gigawatts of coal-fed power plants by 2016 in addition to closings already announced to rebalance supply and demand, according to researcher Pira Energy Group.”

    More baseload shut down.

    “The announcement is the latest sign of how Germany’s energy policy of the past few years has undermined the country’s formerly lucrative conventional power-generation industry.”

    “The rising amounts of power from wind farms and solar-power plants coming on the grid have resulted in a capacity glut that has eroded wholesale power prices and the profitability of large power stations.”


    South Australia?

    “The decline in demand and wholesale prices, and the rising influence of rooftop solar may be about to claim its biggest base-load victim to date in Australia, with talk that the 980MW Wallerawang coal fired power station in NSW could be closed in 2014.

    Some 3,000MW of fossil fuel capacity has been closed or mothballed in the last 12 months. ”


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